CMS Gains New Authority to Exclude Healthcare Providers
Providers face direct CMS enforcement for fraud and kickbacks as the agency takes over new exclusion powers from the HHS.
Updated on Oct. 15, 2026 in Healthcare
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The Department of Health and Human Services has delegated permissive exclusion authority under Section 1128(b) of the Social Security Act to the Centers for Medicare and Medicaid Services. This shift allows CMS to exclude providers for fraud, license issues, or kickbacks to improve program integrity and reduce investigative redundancy.
Why it matters
By consolidating enforcement powers within CMS, federal regulators aim to shorten the time between identifying billing misconduct and removing problematic providers from the Medicare and Medicaid programs. This change alters the compliance landscape for healthcare practices by placing investigation and exclusion under a single administrative roof.
The delegation of Section 1128(b) authority empowers CMS to act on fraud, license revocations, and kickbacks. While the HHS inspector general maintains its existing oversight, CMS is now tasked with managing exclusion determinations to streamline program integrity across the nation.
The players
Centers for Medicare and Medicaid Services
The federal agency responsible for administering Medicare and Medicaid, overseeing health insurance standards, and managing national healthcare program integrity.
Department of Health and Human Services
The cabinet-level executive department that establishes national health policies and oversees the broader U.S. health and human services regulatory framework.
The details
CMS requested this delegation to consolidate the investigative and evidentiary development processes within the same agency that manages program billing. While CMS can now initiate exclusions for excessive billing or criminal convictions, it cannot issue its own regulations or hold formal hearings, and it must continue to operate under established HHS guidelines. The delegation also retroactively validates any actions taken by the agency before the notice was officially filed.
Timeline
1988: HHS delegated exclusion authorities to the inspector general.
October 14, 2026: The delegation took effect following notice in the Federal Register.
Market Landscape
This move marks a shift in the administrative enforcement of Section 1128(b) of the Social Security Act, which has historically been handled by the inspector general since 1988. It centralizes program integrity functions within CMS to align billing audits with provider exclusion actions.
Healthcare operators should anticipate more unified enforcement actions from CMS, as the agency now manages both billing investigations and provider exclusions. Ensure your compliance programs are current on billing practices, as the agency now has a more direct mechanism to exclude providers for conduct violations.
The takeaway
The consolidation of enforcement authority signals a more aggressive posture from CMS toward program integrity. Compliance officers should monitor for updated guidance from CMS on how it plans to integrate these powers with existing HHS oversight protocols.
Further reading
For more on evolving federal oversight, visit the Healthcare section.
Source note: This article includes information reported by Becker's Hospital Review | Healthcare News & Analysis.
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Should federal health agencies have increased authority to exclude medical providers from government healthcare programs?
